Bitcoin’s Ascent to $27,000 and the Effect on PPI Inflation

2023-09-27, 08:05

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## [TL; DR]
Analysts believe that the <a href="/uk/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin price</a> may rise above $27,000 and push towards $46,000.

After the 2024 [bitcoin halving](https://www.gate.io/blog_detail/1067/bitcoin-halving-what-it-is. "bitcoin halving") event the price of BTC may rise until October 2025.

The main reason why BTC is touted as a hedge against inflation is its limited supply of 21 million. 
## Introduction 
Inflation is a macroeconomic variable that affects values of different products and services. However, its impact on prices of different commodities varies depending on their nature and demand. Currently, there is controversy in the market on whether or not cryptocurrencies are susceptible to inflation. This guide will delve on the impact of inflation on the value of <a href="/uk/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a>. 
## Bitcoin’s Ascent towards $27,000 in the Wake of a New Inflation Report
During mid-September the [Bitcoin price showed](https://www.gate.io/price/bitcoin-btc "Bitcoin price showed") an upward traction towards $27,000. As of 14 September many [crypto traders](https://www.gate.io/trade/BTC_USDT "crypto traders") expected its price momentum to rise since the Federal Reserve had not indicated its intention to hike interest rates despite a resurgence in inflation.

On 14 September BTC attained a high of $26,762. Its price rose amid an indication that inflation has been rising since August. Both the Producer Price Index (PPI) and Consumer Price Index (CPI) showed a rise in prices of many goods in the United States. For example, the recently published statistics show that the Producer Price Index (PPI) clocked 1.6% year-on-year, surpassing the estimated 1.3%.

Related news: [Bitcoin (BTC) Price at Risk: Key Indicators Signal Drop Below $29,000](https://www.gate.io/blog_detail/3072/bitcoin-btc-price-at-risk-key-indicators-signal-drop-below-29-000 "Bitcoin (BTC) Price at Risk: Key Indicators Signal Drop Below $29,000")

Despite the indication of a general increase in prices of most commodities, both the traditional financial and crypto markets rejected the possibility of another interest hike.

According to CME Group’s FedWatch Tool, there is no consensus within the market that the Federal Reserve may increase interest rate in September. Conversely, it shows a 97% possibility of a pause in interest rate hike.

During mid- September the crypto market’s resilience was evident as there was a disconnection between CPI inflation data and market sentiment. For example, the prices of major cryptocurrencies including [bitcoin](https://www.gate.io/learn/category/bitcoin "bitcoin") remained stable around mid-month despite the European Central Bank’s (ECB) 0.25% interest rate hike. 
## Bitcoin Price Prediction: BTC to Surpass $27,000
Many market analysts think that bitcoin will soon surpass $27,000 as we move towards the [next halving event](https://www.gate.io/explore/bitcoin-halving-countdown "next halving event") which will occur in April 2024. Bitcoin price movements during mid-September indicate a high possibility of BTC price rise towards $46,000 in the coming few months as the next diagram indicates. Here is a [BTC price forecast for 2025](https://www.gate.io/blog_detail/26 "BTC price forecast for 2025"). 
![](https://gimg2.gateimg.com/image/article/169580177710121695801320_.pic.jpg)
BTC Targeting $46,000 - Rekt Capital

As <a href="/uk/price/the-graph-grt" target="_blank" class="blog_inner_link">The Graph</a> indicates, as of 15 September investors [would buy bitcoin](https://www.gate.io/buy_crypto "would buy bitcoin") at $26,624. Another slight price increase would have pushed its value above $27,000. According to Rekt capital, BTC is likely to maintain an upward price momentum until 2024 when the next halvening will occur.

However, that is not going to be the end of BTC’s upward price movement. [Rekt capital said](https://twitter.com/CryptoJelleNL/status/1673970594990227459 "Rekt capital said"), “If history repeats, Bitcoin could top in either mid-September 2025 or mid-October 2025.”

Nonetheless, Rekt Capital has explained a possibility of a BTC downward price movement. He said, “And as long as $26k holds as support, Phase A-B of the fractal could be in play. A relief rally followed by rejection could reveal a weakening support at $26k.” The next graph illustrates that possibility. 
![](https://gimg2.gateimg.com/image/article/169580183410131695801336_.pic.jpg)
Bitcoin’s Possible Downward Price Movement - Rektcapital

According to the above illustration the bitcoin price may fall instead of rising as “the [#BTC Bearish Fractal](https://twitter.com/rektcapital/status/1702255703191154872 "#BTC Bearish Fractal") is still in play as BTC has failed to hold above ~$26, 000,” which may reignite the bearish momentum.
## Relationship between Bitcoin Price and CPI Inflation 
Before we discuss the relationship between the price of bitcoin and CPI inflation let’s first understand what inflation is. In simple terms, inflation is the general rise in prices of different goods and services within a country.

One cause of inflation in a country is the government’s printing of more money. That is where bitcoin differs from fiat currencies since it has a limited supply of 21 million coins. In crypto terms, inflation occurs when there is an increase in the supply of the coin. The fact that a few bitcoins are mined annually means it has a very low rate of inflation.

Past trends have shown that there is a negative correlation between the price of bitcoin and CPI inflation. This is because when inflation increases the value of bitcoin often falls. When inflation increases there is a reduction in household disposable income which limits their appetite to purchase bitcoin and other cryptocurrencies. 
## Causes of BTC Price Rises
There are various factors that lead to the increase in the value of bitcoin. The mining difficulty, the money supply in the economy, the network effect, the halving event, the coin’s demand and supply, competition, market sentiment as well as investor behaviour influence its value.

For instance, if there is an increase in demand for BTC while supply is constant or decreasing its price may rise. Usually, the price of bitcoin rises before and after a halving event.

Read also: [BTC halved for the fourth time. How does it affect the supply of BTC?](https://www.gate.io/blog_detail/1866 "BTC halved for the fourth time. How does it affect the supply of BTC?")

For instance, many bitcoin investors expect its price to increase after a halving event, therefore they buy and hold much BTC as we move towards that date. That reduces its supply and increases its demand resulting in a price rise.

Market sentiment also drives the price of bitcoin upwards or downwards. When many investors are bullish they purchase much bitcoin which pushes its price up. If they are bearish they sell much of their BTC holding which increases its selling pressure leading to its price fall. The next table shows bitcoin price movements over the past few years. 
![](https://gimg2.gateimg.com/image/article/169580194010141695801359_.pic.jpg)
Bitcoin Price Movements since 2014 - Yahoo Finance

As the table indicates, the bitcoin price has been increasing steadily over the years despite experiencing some short-term downswings.

[When bitcoin was launched in 2009](https://www.gate.io/live/video/b0c85a9d10ce86f85ee6f7429bf0162d "When bitcoin was launched in 2009") its value was slightly above zero. However by the end of 2011 [people could buy BTC](https://www.gate.io/how-to-buy/bitcoin-btc "people could buy BTC") for around $5.00. From there, it experienced an astronomical rise in value after the 2012 halving event. For instance by 2013 it had a value of $1,100.

The previous three bitcoin halving events that occurred in 2012, 2016 and 2020 were the greatest catalysts for the steady growth in its price. However, an increase in institutional adoption of BTC has further pushed its price up.
## Does Bitcoin Hedge against Inflation
There are several reasons why [people tout bitcoin](https://www.gate.io/learn/articles/what-is-bitcoin/169 "people tout bitcoin") as a hedge against inflation. Unlike fiat currencies whose values may decrease when governments print more money, the supply of BTC is limited to 21 million. It is its scarcity which keeps its inflation rate at very low levels.

Since bitcoin is the largest cryptocurrency it is “inflation-resistant.” Although its price may fluctuate in the short term, it often maintains an upward trend over a long period such as 10 years.

Nonetheless, during the post-Covid 19 peak era bitcoin has behaved more inflationary than before. The increased adoption of bitcoin by large institutional investors has tended to align it to general market price movements. For example, when the Federal Reserve increases interest rates the price of bitcoin often falls within the short term.

Read also: [Will Bitcoin Crash In the future?](https://www.gate.io/blog_detail/45/will-bitcoin-crash-in-the-future "Will Bitcoin Crash In the future?")

However, bitcoin is not 100% inflation proof. This is because its price is mainly determined by the forces of supply and demand. Since it is not backed by any physical goods it experiences price falls or rises in the short run. 
## Conclusion 
Several analysts including Rekt Capital believe that the bitcoin price may steadily rise until the halving event in 2024. Although its target is $27,000 it may fall below $26,000 if there is an increase in bearish pressure. Over the years, the halving event and a rise in adoption by institutional investors pushed its price up. 
## FAQs about Bitcoin
### What would 1 BTC worth in 10 years?
The price of bitcoin is likely to fluctuate between $300,000 and $500, 000 within the next 10 years. The next halving events as well as greater adoption should push its price very high. Read also: [BTC Price Prediction & Forecast for 2023, 2025, 2030](https://www.gate.io/price-prediction/bitcoin-btc "BTC Price Prediction & Forecast for 2023, 2025, 2030")
### Why did bitcoin go up?
Bitcoin halving events, increase in adoption and more awareness enabled the bitcoin value to rise since 2009. The halving event reduces BTC issuance rate as well as its inflation rate.
### What has caused bitcoin to rise so quickly? Is it price?
The bitcoin supply, the market demand, its halving and investor sentiment are some factors that have contributed to BTC’s sharp price rise. Other fundamental macroeconomic factors like the fall in inflation and interest rate have created a bullish moment for BTC. Crypto news such as Ripple’s partial victory over the SEC recently pushed its price up. Read also: [Market Predictions After the BTC Crash on August 16](https://www.gate.io/blog_detail/3198/reviewing-market-predictions-after-the-btc-crash-on-august-17-and-looking-forward-to-future-trends "Market Predictions After the BTC Crash on August 16")
### Where will crypto be in 5 years?
The institutional adoption of major cryptocurrency will force their prices to rise. It is also likely that many governments will have created suitable crypto regulations which may increase their adoption rate.

<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
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